1. Presentation for Cayman Islands Investment Bureau Certain Aspects of the National Pensions Law November 2007

2. Presentation Outline 1.National Pensions Law – Background 2.Employer’s Responsibilities Compliance Issues Cases Penalties 3.Employee’s Responsibilities 4.Discussion

3. National Pensions Law - Background The Law establishes minimum standards for pension plans operating in the Cayman Islands – it onto itself is not a “pension plan” and provides no benefits National Pensions Law became effective July 1, 1998 for all Caymanians Effective January 1, 1999 for expatriate employees, subject to qualification period (except domestics employed to work in individual homes) Immediate “vesting” of contributions Some plans “grandfathered” Top up plans permitted to operate PS Pension Plan exempt from provisions of NP Law Pension Participation is Mandatory Therefore, a Condition of Employment In the Cayman Islands

4. Background Two Basic types of pension plans –Defined benefit – very few, usually an International Employer –Defined contribution – all the current multi-employer plans operating in the Cayman Islands Cayman National Pension Plan Chamber of Commerce Pension Plan Fidelity Pension Plan Silver Thatch Pension Plan British American Pension Plan British Caymanian Pension Plan Employer chooses type of pension plan Employees need to be consulted and choose the actual pension plan

5. Background Contribution rates – combined employee and employer must be a minimum of 10% of Pensionable Earnings –Employees – no more than 5% of pensionable earnings (deductions from salary permitted to be taken by the employer) –Employers – no less than 5% of pensionable earnings –Self employed – 10% of pensionable earnings Timing – must be paid at regular intervals (at least monthly) and are due to be paid by the 15 th of the month following the month for which the contribution is attributable. Status – money withheld by an employer, from money payable to an employee, whether by payroll deduction or otherwise, and an amount equal to the required employer contribution due to a pension plan, is deemed to be held in trust by the employer until the employer pays the money into the pension fund.

6. Employer’s responsibilities Provide a pension plan or make contributions to a pension plan for every person employed by the employer in the Islands. Ensure that the employee and employer pension contributions are paid into the appropriate pension fund by the 15 th of the month following the month for which the contributions are attributable. Advise the pension plan administrator of changes in employment status of employees and provide administrative information required, such as contact details, employee information, etc. Provide any information requested by the National Pensions Office and comply with their orders and directives

7. Compliance issues Types of non-compliance –Ignorance or misunderstanding of the Law –Unclear or fundamentally impractical legislation –Intentional non-compliance due to indifference, greed, philosophical belief or belief the Law will not be enforced or lacks serious consequences Examples of non-compliance –Employer does not establish a pension plan or doesn’t enroll employees in an existing plan or take deductions –Employer deducts contributions from wages but does not remit to the pension plan –Employer doesn’t remit within time limits required –Failure to comply with orders or directives of the National Pensions Office –Failure to comply with technical aspects of the Law Investment restrictions Treatment of non-residents Application of Law to international pension plans

8. Cases (fiscal 06/07) Number of cases (employers) open/under investigation 633 avg Number of cases resolved/closed in the financial year (06/07) 309 Number of 1 st directives for compliance issued to employers 334 Number of monthly reports from administrators processed 17 Number of employer sites visited20

9. Penalties Offence (section of the Law)Repercussion Not providing a pension plan or not making contributions for an employee (4(2)) $5,000 on summary conviction, $10,000 on indictment Administering a plan that has not been registered (6(5)) $5,000 on summary conviction + additional $500 a day Failure to pay contributions within timeframe given by Superintendent (48) $500 for each day contributions are in arrears Failure to comply with Superintendent’s request for information in timeframe given (81 (4), 82 (3)) $1,000 on summary conviction

10. Penalties Offence (section of the Law)Repercussion Hindering or obstructing a person from carrying out duties under the Law (88(2)) $1,000 on summary conviction Contravening any other aspect of the NP Law including orders issued (90 (1)) $5,000 on summary conviction Failure to pay contributions into a plan (90 (2)) Court orders payment with interest at the rate of the CI Prime Rate + 5% compounded daily.

11. Employee’s responsibilities Take an interest in what pension plan your employer has Ensure your employer is providing you with a plan Ensure payroll deductions are being taken, if applicable Ensure contributions are going to the plan administrator Save any payroll slips and compare pension deduction amounts to pension plan statements – insure you receive a statement Notify the pension plan administrator of changes in personal information such as address, phone numbers, marital status, beneficiaries, etc. Plan to attend your pension plan’s annual general meetings and information sessions Be aware of your employer’s responsibilities, your responsibilities and discuss these with co-workers

12. Discussion Questions ? ? ? www.npo.gov.ky